Swan Bitcoin has filed a lawsuit against several former employees and consultants, accusing them of stealing its Bitcoin mining business with help from Tether, its former partner.  

Former Chinese finance minister Lou Jiwei, speaking at the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, urged China to carefully monitor advancements in cryptocurrency.

The U.S. Securities and Exchange Commission (SEC) has charged the teams behind the Solana-based decentralized finance (DeFi) platform Mango Markets with securities violations. 

Top stories in the Crypto Roundup today:

• Swan Bitcoin Lawsuit: Ex-Employees and Tether Accused of Mining Business Conspiracy
• Ex-Chinese Finance Minister Cautions on Crypto as US Embraces Spot Bitcoin ETFs
• Mango Markets to Destroy All MNGO Tokens Following SEC Settlement
• Fed Interest Rate Cuts to Impact Stablecoin Revenues

Swan Bitcoin Lawsuit: Ex-Employees and Tether Accused of Mining Business Conspiracy

Swan Bitcoin has filed a lawsuit against several former employees and consultants, accusing them of stealing its Bitcoin mining business with help from Tether, its former partner. The lawsuit claims six employees accessed Swan’s proprietary trade secrets, including key code, hash-rate optimization techniques, and financial models, to form a competing company called Proton Management.

On August 8, the employees resigned en masse to join Proton in a coordinated move. Swan also alleges Tether’s involvement, though Tether is not named as a defendant. Tether had funded Swan’s BTC mining operation in Tasmania in 2023 and was expected to lead a $25 million Series C funding round in early 2024, valuing Swan at $1 billion.

However, by mid-2024, Tether allegedly encouraged Swan’s employees to defect, with an advisor suggesting that Swan had “no value” to Tether and proposing the employees leave to continue their mining work elsewhere.

According to Swan, these actions caused significant disruption within the company. By July 22, Swan canceled its plans to go public, shut down its mining division, and laid off 45% of its workforce.

A month later, the employees resigned to join Proton, for which Swan claims they received legal support from Tether. On August 9, the day after the mass resignation, Tether allegedly sent Swan a “Notice of Event of Default,” accusing the company of failing to maintain necessary personnel.

Swan is seeking permanent injunctions, restitution, and punitive damages against Proton Management. Tether has denied any wrongdoing but is closely monitoring the lawsuit while continuing its regular business operations.

Ex-Chinese Finance Minister Cautions on Crypto as US Embraces Spot Bitcoin ETFs

At the 2024 Tsinghua Wudaokou Chief Economists Forum in Beijing, Lou Jiwei, China’s former finance minister, urged the country to reassess the risks posed by cryptocurrencies. As reported by Sina Finance, Lou warned about the financial instability that could arise from digital currencies, specifically citing their volatility and potential misuse in illicit activities like money laundering.

Lou highlighted how the U.S. has shifted its stance on cryptocurrencies, noting the recent approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC). He expressed concerns that price swings in cryptocurrencies could destabilize the global financial system and lead to broader market disruptions.

In his speech, Lou pointed out that digital assets have long been seen as a threat to financial security, particularly in areas like Anti-Money Laundering (AML) and anti-terrorism efforts. He emphasized the need for a thorough analysis of these dangers to ensure that China's financial system remains safeguarded against future risks.

Lou also referenced the recent shift in U.S. policy towards digital assets, encouraging Chinese leaders to stay informed on these international developments. He stressed that understanding both the opportunities and the risks of the digital economy is crucial, especially as the U.S. continues integrating crypto into its financial landscape.

Even with China's 2021 ban on Bitcoin mining and trading, the country still dominates more than 55% of the global Bitcoin mining network through its mining pools. However, according to CryptoQuant CEO Ki Young Ju, this dominance is gradually shifting to the U.S., where American mining pools now control roughly 40% of Bitcoin mining, catering to institutional players.

Mango Markets to Destroy All MNGO Tokens Following SEC Settlement

The U.S. Securities and Exchange Commission (SEC) has charged the teams behind the Solana-based decentralized finance (DeFi) platform Mango Markets with securities violations. The entities involved—Mango DAO, Mango Labs, and the Blockworks Foundation—were under investigation, which has now resulted in a settlement.

The SEC’s charges have already been settled, with Mango DAO token holders voting to approve the agreement in August. As part of the settlement, the companies will collectively pay nearly $700,000 in penalties. They have also agreed to destroy all MNGO tokens, remove MNGO from trading platforms, and cease any attempts to promote or offer MNGO for trading.

Mango DAO and the Blockworks Foundation faced charges related to the offering and sale of the MNGO tokens. Mango Labs and the Blockworks Foundation were also charged for functioning as unregistered brokers.

Mango Markets made headlines in 2022 after an attacker exploited a flaw in the platform to steal $110 million. The hacker temporarily inflated the value of the platform’s collateral, allowing him to borrow from Mango’s treasury and vanish with the funds.

Avraham Eisenberg was later arrested and convicted of fraud in April for orchestrating the exploit. His case was notable as his defense argued that such DeFi exploits weren’t covered under existing U.S. laws.

The Commodity Futures Trading Commission (CFTC) also filed charges against Eisenberg, Mango Markets, and its founders. Recently, Mango Markets agreed to pay a $500,000 fine to settle with the CFTC without admitting or denying wrongdoing.

The SEC’s acting crypto enforcement chief, Jorge G. Tenreiro, emphasized that the decentralized nature of DAOs does not exempt projects from regulatory compliance. He reiterated that any entity acting as a securities intermediary must be registered, regardless of the technology used.

Fed Interest Rate Cuts to Impact Stablecoin Revenues

The Federal Reserve’s recent decision to cut interest rates for the first time in March 2020 is set to lead to a loss of $625 million in annual interest income for the top five centralized stablecoins per 50bps rate cut, as they hold nearly $125 billion in US Treasury Bills.

Their latest attestation reports show Tether holds nearly $93.2 billion in US Treasury bills and repurchase agreements, which contributed to the majority of $5.2 billion net profit in the first half of the year. USDC, the second-largest stablecoins, holds $28.7 billion in US Treasury bills via the Circle Reserve Fund, while FDUSD, PYUSD, and TUSD hold US Treasury assets worth $1.83 billion, $634 million and $502 million, respectively.

Dig deeper into the stablecoin sector through CCData’s latest Stablecoins & CBDCs report.

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